Indonesia’s Lion Air: record plane deals, safety woes
A boom in demand in the archipelago prompted Lion Air to go on an aircraft-buying spree that made headlines around the world starting in 2011
SINGAPORE: Indonesian budget carrier Lion Air leapt from obscurity to global fame in 2011 when it ordered 230 Boeing planes worth a whopping $22 billion (Dh80 billion), the US maker’s biggest ever deal, but it has been dogged by safety issues for years.
When co-founder Rusdi Kirana was asked months later if bank loans would be needed to finance the purchase, he told reporters at the 2012 Singapore Airshow: “I am the bank.”
Founded in 1999 by brothers Rusdi and Kusnan Kirani, the budget carrier began operations in 2000 as Indonesia’s first low-cost carrier, using a leased Boeing 737-200 between Jakarta and Denpasar, capital of the resort island of Bali.
It quickly rode the crest of Indonesia’s soaring domestic air travel sector to become the country’s biggest private airline and second largest in Southeast Asia after Malaysian carrier AirAsia.
A boom in demand in the archipelago, the world’s fourth most populous nation, prompted Lion Air to go on an aircraft-buying spree that made headlines around the world starting in 2011.
With then US President Barack Obama as a witness, Boeing and Lion Air signed the record deal on the sidelines of an Asian summit in Bali for the purchase of 29 737-900s and 201 orders of the new 737 MAX, along with options for 150 more aircraft.
The orders were worth $21.7 billion at list prices, with the US aircraft maker describing it as “the largest commercial plane order ever in Boeing’s history by both dollar volume and total number of planes”.
But Lion Air soon surpassed that record when it ordered 234 medium-haul A320 planes from Airbus worth a whopping $24 billion at catalogue prices in 2013.
‘Challenging situation’
The carrier currently operates domestic flights and a number of international routes in Southeast Asia, Australia and the Middle East.
However, it has struggled with issues of safety and poor management and was banned, along with other Indonesian airlines, from flying into European airspace until 2016.
Its first deadly accident in 2004 saw 26 people killed and more than 100 injured when a Lion Air plane skidded at an airport in the central Java city of Solo, with the airline blaming bad weather and strong tailwinds.
In 2013, a rookie pilot at the controls of a Lion Air plane undershot the runway and landed in the sea off Bali, splitting the plane in two and forcing passengers to swim to safety. Remarkably no one was killed in the accident.
Three years later, two Lion Air passenger planes clipped wings as they were about to take off from Jakarta’s main Soekarno-Hatta airport.
Monday’s crash is “symptomatic of the overall concern that the aviation industry has with Indonesia’s air safety record”, said Shukor Yusof of Malaysia-based aviation consultancy Endau Analytics.
Between 2010 and 2015, Indonesia has had an air incident each year where the plane had to be written off, Yusof told AFP.
Indonesia “needs a lot of assistance from aviation specialists and experts”, he said, adding, “the country appears unable to resolve this problem on its own.”
Infrastructure improvements, pilot training and aircraft maintenance have not kept pace with the explosion in air traffic growth in the country, analysts say.
As the aviation industry continues to grow, “it’s hard to keep that institutional safety culture,” said Greg Waldron, Asia managing editor for industry publication Flightglobal.
“So it’s a challenging situation.”